A recent NLJ story, “New Century Settlement a $14.4 Million Payday for Bernstein Litowitz” reports that U.S. District Judge Dean Pregerson in Los Angeles on Monday approved more than $14.4 million in attorney fees for Bernstein Litowitz Berger & Grossman as lead plaintiffs’ counsel in a $125 million shareholder settlement involving bankrupt New Century Financial Corp., one of the largest lenders to collapse during the subprime mortgage meltdown.  Pergerson told Salvatore Graziano, a partner at the New York firm, that the award “might have set a record for the lowest” in attorney fees in a case such as this.

The complaint alleged that New Century failed to indicate on financial statements the risks its executives were taking in pushing subprime loans.  Bernstein Litowitz was hired on a contingency basis by the New York State Teachers’ Retirement System.  The case settled for $125 million, with Bernstein Litowitz getting 11.5% of the recovery, plus more than $3 million in reimbursed expenses.  The firm noted that the fee was “well below” the 25% usually granted in subprime mortgage securities class actions within the U.S. Court of Appeals for the Ninth Circuit.

The firm said no one had objected to the settlement and that its client has a reputation for scrutinizing attorney fees.  “They have appeared in numerous courts across the country when they feel the fees are too high,” Graziano said in court.  The settlement included three stipulations: Auditor KPMG LLP will pay $44.75 million; the underwriter defendants will pay $15 million; and New Century’s former officers and directors collectively will pay more than $65 million.